A highly respected securities analyst has just initiated coverage of three of Madison Avenue’s biggest holding companies –- WPP,
Interpublic and Omnicom – and he gave strong ratings for the first two and an overwhelming endorsement for the overall agency business, calling
its “durability under-appreciated.” That analyst should know -- before joining Wall Street’s Pivotal Research Group as the lead ad
industry analyst, he was the head of global forecasting at Interpublic’s Magna unit, and Madison Avenue’s de facto chief economist: Brian
Wieser.

Noting that far from being disintermediated by digital media, as some have predicted, ad agencies are actually the “primary
beneficiaries,” Wieser wrote in a note sent to investors this morning that initiated coverage of WPP’s and Interpublic’s stock with
“buy” ratings, and Omnicom’s with a “hold.”

“Investor concern about the threat of disintermediation by the
likes of Google is generally unwarranted,” Wieser wrote. “Agencies offer unique services to their clients, namely ‘service’
itself in helping navigate ideas through marketers’ organizations. This competency is not typically developed by media technology companies.
While agencies are unlikely to ever see operating margins like those of the media owners given the fragmented and highly competitive nature of the
industry, their ability to adapt should not be underestimated.

“Digital media is increasing the importance of agencies and service
providers as filters and navigators of ideas. As such, the agency sector is literally a “digital dividend” on the application of
technology to marketing.”

Among the three holding companies, Wieser is most optimistic on the prospects for WPP, subtitling his analysis
of the agency group as “Daring To Dream,” and noting, “We like the company’s long-term exposure to China – possibly the
most significant of any western media-related company – its independent digital platform and its dominant media services business.”

Wieser’s assessment of Interpublic may be even more interesting to people on both Madison Avenue and Wall Street, because he was a company
insider for so long before leaving to work briefly at targeted TV start-up Simulmedia before joining Pivotal several months ago.

Despite
frequently getting slammed by securities analysts for its lagging margins and frequently lower profile than the other big holding companies, Wieser
dubbed Interpublic “a strong story stock,” noting: ‘Our experience with the company’s senior management gives us conviction
about the company’s ability to execute against the goals it has set for itself,” and adding that it is “underappreciated” by
investors.

While not qualifying for a “buy” rating, Wieser is nonetheless upbeat on prospects for Omnicom too, but said the prices
its shares have been trading at are “approaching fair value” relative to other agency stocks.

“As a stable bellwether on the
sector, investors can still gain low near-term risk-adjusted exposure to agencies through Omnicom,” he wrote, adding, “However, as with
Interpublic the company needs sustained efforts in Asia Pacific and other faster growing markets to out-perform in the long-term.”

This is a great article, Joe and Brian has does a real service to the agency business. The success of agencies and particularly media agencies to adapt to the digital world is one of the most under reported stories over the past decade. Rather, what we hear sometimes is how the agency business is "dead." Of course, this is ridiculous.
Agencies are more valuable today than they have ever been. They will be around long after many of today's media and tech startups have come and gone.
Hopefully, the share prices of these companies will soon better reflect the essential nature of these businesses.